The first medical-aid scheme run by a trade union was launched last week, bringing a powerful new force into the battle to control the rising cost of being sick and getting well in South Africa.
Trade union Solidarity registered its Solvita scheme at the beginning of this year as a not-for-profit medical aid restricted to the union’s 130Â 000 members. Solidarity boasts that it has managed to cut costs to members by more than 20% compared with private-sector schemes.
Solvita’s principal officer, Malcolm Coleman, says that plans to create a union medical scheme were implemented late last year because many Solidarity members could no longer afford private medical insurance. Escalating private hospital costs and the continued rise of medical inflation above consumer inflation were the trigger.
‘We are driven to develop and maintain unity in healthcare and to protect our members,†says Coleman. As well as making health insurance affordable for people who currently have none, Solvita could also put more pressure on the Âprivate-Âsector schemes to which other Solvita members currently belong.
About 30% of Solidarity members — who by definition are all formally employed — cannot afford a private medical aid. In the population at large, only one-third of the approximately nine million South Africans in formal employment are members of medical aid schemes. In total about seven million people are medical aid beneficiaries, mostly dependants who are children or are adults outside formal employment.
Unusually for a ‘closed†or restricted-membership medical scheme, Solvita’s members will belong to different employers and different industries. In essence it is the first private-sector counterpart to the rapidly growing Government Employee Medical Scheme (Gems), which is now the second-largest medical aid in the country.
Coleman says that if Solvita proves successful, he hopes that other trade unions will implement similar schemes or work with Solidarity. If a large, low-cost, cross-sectoral trade-union medical scheme does develop, it would have significant bargaining power in cost negotiations with different groups — just as Gems has managed to develop in its first three years of existence.
Cosatu spokesperson Patrick Craven says that his organisation will be looking at the development of Solvita with interest but at the moment has no intention to start a similar project.
The emergence of Solvita may also increase Solidarity’s membership, as the trade union can now offer its members an additional tangible benefit despite union bargaining powers being weakened.
Solvita offers a no-frills, comprehensive managed scheme, which initially will target members who earn between R3Â 500 and R9Â 000 a month.
Solidarity has been outspoken about the effect of rising medical aid costs on its members. The union’s deputy general secretary, Dirk Hermann, has attacked private hospital groups, saying that they want to implement ‘outrageous price increases on general costs such as theatre fees and the cost of surgeryâ€.
He particularly criticises Netcare, pointing out that it made a profit of almost R3-billion in the financial year ending in 2007, and had increased earnings per share by 27% during the year. The Netcare group also owns the largest chain of private hospitals in the United Kingdom.